How Much Super Should I Have At My Age..?

“We only have $X in our superannuation, and we know that this isn’t very much at our age..”

This is one of the most common statements that I hear from Australian expats in Singapore and across the globe, particularly from those that have been living and working abroad for some time.

Chances are that if they’ve been living and working abroad for some time, particularly without receiving any financial advice, they will have largely ignored their superannuation and won’t have been actively making contributions. However, what is also true in many cases, is that they’ve been accumulating wealth in other assets such as a share portfolio, managed funds, ETFs, and even direct property. Whilst their wealth may not be accumulated inside their superannuation, they have still been saving towards their retirement.

For those working in Australia, the legislation requires that their employer currently must contribute 10.5% of their salary into their super fund on their behalf, and employees can, subject to the relevant thresholds, opt-in to contribute additional funds via salary sacrifice up to the contribution cap of A$27,500 per annum.

Of course, there are also those who’ve neither been contributing to super nor saving anything for their retirement whilst working abroad, and this is certainly something that in most cases requires a course correction. If this is you, it’s time to act and seek advice.

Getting back to superannuation, to put things into perspective, when we consider average ages and retirement saving balances, how much should you have inside your super fund in each age group? Before we dive in, it’s important to recognise that this includes all of your retirement savings, not just your superannuation balance, a particularly important distinction for Australian expats.

In Your 20’s

For many in their 20s, this is the beginning of their professional working life, and your employer has likely selected a default fund, or you’ve kept this from a previous employer, and you’re starting to build up your balance with the 10.5% annual super contribution. It’s important to note here that you can shop around for a super fund that suits you and aligns with your financial goals.

If you’ve worked for a few different employers in your teen years, and even early 20s, it’s important to review your superannuation balances and consolidate them where appropriate into one fund. You can check on reported superannuation balances via your myGov account by linking it to the ATO portal.

In terms of average balances for those in their mid to late 20s, men on average have a balance of $45,100 while women have an average balance of $39,400.

This can be a great time to be making additional contributions to your retirement savings to allow for the 8th wonder of the world, compound interest, to really work its magic for you and boost your overall returns over time. It’s important to ensure that this aligns with other financial goals you may have such as saving for a house deposit, and covering school fees if you have or are planning to have children or otherwise.

In Your 30’s

Your 30’s can be a great time to be considering contribution strategies to your superannuation funds, particularly if one spouse is earning less than the other and may be eligible for low to middle-income benefits. This could include such strategies as a spouse co-contribution strategy allowing one spouse to contribute to the super fund of the other and receive a tax credit for doing so. You may also be eligible for the Government Co-Contribution option if you meet the low-income criteria, which allows you to contribute up to $1,000 to your super fund following which the Government will contribute an additional $500 to your fund.

As your super balance grows in your 30s, this can also be a good time to review your fund options as you may not have to only consider those that are attractive to members with a low super fund balance any longer. You may wish to consider direct share investment options, those that allow for ETFs, those that align to an ESG or impact investment philosophy, or even a Self-Managed Superannuation Fund (SMSF), which could be appropriate in some circumstances. It’s certainly important to seek professional advice here to consider which may be optimal for you.

With regard to the average super balances, men by their mid-30s will typically have $130,700 in their super, while women have $92,800 at this stage.

Whilst the gender gap in terms of superannuation balances is slowly closing here, if one spouse is planning on taking time out of the workforce, this can be a good time to consider super splitting between spouses, making additional voluntary contributions or otherwise to ensure that your long-term retirement savings don’t take too much of a hit here.

In Your 40’s

For many, the 40’s is the time that they start to take retirement a lot more seriously as it starts to feel closer. This could be the time for many that their parents are reaching retirement age and having more conversations with their family about how they’ve prepared for retirement, or potentially strategies and paths that they wish they’d taken at an earlier age to put themselves into a better position.

In terms of access to superannuation, this is still more than a decade away, and for some, even two decades, so there is plenty of time to continue to build up your retirement savings. This may be a time to start to boost your salary-sacrifice superannuation contributions, review your risk profile and overall asset allocation within your super, and perhaps even after-tax contributions. Again, it’s important to speak with your Financial Planner to review your options here.

Your 40’s can also be a time where significant expenses can creep up, which could be secondary school or university fees for your children, wedding costs for your children, family holidays, and even in some cases, unfortunately, divorce. While many of these aspects can be difficult to plan for with any precision, it is important to consider the ‘what-if’ scenarios.

With regard to average balances, by the mid-40s, men have saved $243,000 inside their super and $163,300 for women. You can now start to see the gender gap becoming more pronounced as another decade has passed.

In Your 50’s

The 50s can be a bit of a reality check as many people start to pay a lot more attention to their superannuation balances or start to worry about the lack of retirement savings. This will largely depend on the strategies that you’ve adopted up to this point, and hopefully, you’ve been diligently saving and avoiding getting thrown off-track by changing your investments due to market noise.

If you reach your 50s and realise that you don’t have enough saved for your retirement, in most cases, there is still time to remedy this, or at least boost your savings as much as possible. This is the time to start looking at non-concessional, or after-tax, super contributions, additional automated savings, and consider any other advantageous options to boost your overall retirement savings.

This can also be an excellent time to review the risk profile of your investments and ensure that you’re not taking on too much or too little risk based on your time horizon to retirement.

At this stage of life, men have an overage of $387,200 saved in their super, and women have $254,500 by their mid to late 50’s.

In Your 60’s

If the plan has remained on course, and you’ve diligently saved for your retirement, the 60s are the time for all of your hard work to be paying off. Hopefully, your children are no longer financially dependent on you, or at the very least the private school fees have ceased, your tax and rental expenses have hopefully declined, and your spending is largely based on creating the lifestyle that you want.

This is a great time to seek financial advice, and ensure that your superannuation is well-structured factoring in taxation rules at the time, your overall risk profile, franking credits on dividends that are received, accumulation versus pension accounts, contribution strategies, and much more. It’s also important to review how you can ensure that not if, but when, the next financial crisis strikes, your retirement income wouldn’t be impacted, which your Adviser can assist you wish.

At this stage, on average men have a super balance of $358,600, and women will have $281,700.

Now that we have an idea of average balances, how much do you actually need for a comfortable retirement..?

The simplest rule of thumb here is to use a 4 or 5% drawdown rate to determine how much you should have saved in your retirement. This can be adjusted dependent on the source of your retirement income, such as if the majority of your income was generated by rent received from investment properties, and the yield was closer to 2%, this rate may need to be reduced requiring a higher savings balance.

Here\'s how the rule of thumb works at 4%.

Let’s assume that to live a comfortable retirement, and the lifestyle that you want, you determine that you need $80,000 per year in today’s dollars. To determine the amount required to generate this, you can divide the $80,000 by 4% (80,000 / 0.04), which equates to $2 million required at retirement.

Using the 5% rule, you would simply divide by 0.05, which would equate to $1.6 million required at retirement.

The 4 and 5 percent rules here are guidelines only, and it’s important to seek personal advice to consider your own goals, objectives, and your financial situation. The Adviser will then be able to guide you on the amount required here.

If you have any questions at all about your own retirement savings and strategies, book a complimentary chat with me and we can start building your retirement roadmap.


To Your Financial Success!

Jarrad Brown is an Australian-trained and qualified Fee-Based Financial Planner with Australian Expatriate Group of Global Financial Consultants Pte Ltd providing specialist financial advice and portfolio management services to Australian professionals in Singapore. Jarrad Brown is an Authorised Representative of Global Financial Consultants Pte Ltd - No: 200305462G | MAS License No: FA100035-3

Australian Expatriate Group is a division of Global Financial Consultants in Singapore providing specialist advice to Australians living abroad.

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General Information Only: The information on this site is of a general nature only. It does not take into account your individual financial situation, objectives, or needs. You should consider your own financial position and requirements before making a decision.

*Please note that Jarrad Brown is not a tax agent or accountant and none of the content outlined here should be taken as personal advice. You should consult your tax agent and financial adviser to review your current personal finances and financial goals to consider whether this strategy is appropriate for you.

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